After weeks of reports that refunds were down, last week’s data from the IRS shows a new trend. Although overall quantity of refunds are down, now the average refund is up 1.9%. After so many headlines to the contrary, I suppose that qualifies as good, national tax news.

But here is the thing to remember about tax refunds:

That is YOUR money that you’re “getting back”.

Think of it like this: you go to a shop and buy something for $5. You hand the cashier a $10 bill. The cashier hands you back a $5 bill as change. Did you just get more money? Of course not; you paid more than the bill, so you got YOUR money back.

With taxes, many Ventura County people are doing this throughout the year, only backwards. You’re paying the “cashier” (er, the IRS) all year long in withholding and estimated payments, and then you hope you’ve paid enough to cover the tab. If, at the end of the year, you had paid $10 for the $5 product, your $5 change is your refund.

Imagine this scenario now — you have a friend who buys the exact same product for the same price and, after all the payments all year long, he paid the cashier $100. WOW, he gets a $95 refund! That’s way more than your $5. But did your friend “do better” than you did? Did he work the system to his advantage? Of course not. Quite the contrary.

A relentless focus on helping our Ventura Countyclients KEEP more of their money in their accounts is what drives our work. Yes, we believe that government needs funding, and yes, taxes are how that happens.

But our mission is that our clients would never fall victim to the confusion inherent within our tax system simply because they didn’t know any better.

It’s a great mission, and it drives our hearts and minds during this season. And we are grateful that you let us do it for YOU.

Now, speaking of falling victim…

Diana Castro’s Three BigTaxScams And How To Beware

“Accuracy is the twin brother of honesty; inaccuracy, of dishonesty.” – Nathaniel Hawthorne

Around this time of year, scammers and fraudsters come out of the walls to take advantage of unsuspecting taxpayers.

Lest you think, “That would never happen to me,” I want to provide you with some tax scams to look out for. It helps to know how scammers strike, and the more you know, the more friends you could help in the future.

Here are a few of the “usual suspects”, and how they’ll attempt to access your information and put a damper on your entire financial world.

1.Something’s Phishy

Here is where they try to steal your info. Phishing is defined as “the fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information”.

If you receive an email saying it’s from the IRS, DO NOT click that email. The IRS will never initiate contact about a bill or refund via email.

Similarly, if you receive a phone call “from the IRS”, I want you to hang up the phone. If the IRS needs to communicate with you, they will first do so through postal mail.

2.Bad Tax Pros, Bad Charities

Unfortunately, some Ventura County tax professionals enter the business with the sole purpose of illegal dealings down the road. They want your information for their own financial gain, and it’s important you do your research before working with them.

Do a thorough online search, read reviews, and ask them if they have referrals you could talk to about their services. (Speaking of which, a review from YOU on Google or other social platforms would always be nice!)

In addition, similar scammers exist in the (fake) charity world. They claim your donations are tax-free, only to solicit money from you with no real purpose behind their organization. Again, these days you can do a lot of online research on your own. But if you have any checks in your system, and don’t have friends or family who would recommend the charity, it’s probably best to stay away.

3.False Claims

First, please do not have anyone prepare your taxes who asks you to sign a blank return or charges fees based on a percentage of your refund. If they do, that’s a big red flag.

Second, scammers often try to get taxpayers to falsely claim income so they can qualify for the Earned Income Tax Credit. This is best avoided with honesty, and not falsifying anything on your return that would affect the Earned Income Tax Credit or Child Tax Credit.

With honesty as your backbone, here’s the summary of freedom from fraudulent activity:

Have Your Guard Up: If anyone contacts you from the IRS, be wary of what they are trying to sell you. Always be skeptical.

Triple-Check Your Sources: The internet is a vast, scary place (where most scammers reside), but there are also great resources (keyword searching through Google etc.) to utilize and find out if the organizations you’re working with are frauds or the real deal.

You Guessed It: Please feel free to reach out to us! Not only do we want to help you navigate tax season (all year round), we want to keep you far away from saboteurs. In that sense, view us like Tax Ghostbusters.

Word on the tax professional “street” is that tax filing numbers are down across the board so far. That is from data released by software providers (though this year, of all years, I simply don’t understand why somebody would use software), as well as overall numbers from the IRS, AND those who are using a professional.

It seems that many Ventura County taxpayers are a little skittish about all of these changes.

And with further news rolling around the newsfeeds that some are seeing lower refunds than they might have expected, well … it seems that this tax season has been a little rocky for the industry.

But that being the case on a broad level, we at Team Legacy Tax Services are in the midst of one of the best tax seasons we’ve ever experienced. From a bunch of wonderful new Ventura County clients, to the gratification we’ve experienced from helping long standing clients keep MORE than they thought was possible … well, suffice to say that we love what we get to do.

So thank you for your referrals, and for continuing to trust us as you have been. And if you haven’t gotten started on it yet … well, having a pro in your corner can make a big difference. So take advantage! Shoot us an email or give us a call: (805) 650-1052. We’ll walk you through whatever you need.

And speaking of what you might need, we’ve received a couple of questions about what happens if you haven’t received a W-2 yet. So I thought I’d take a moment to answer that for you…

IRS Form 4852: Legacy Tax Services Explains the Substitute for the W-2

“Sometimes, disaster can inspire ingenuity.” – Michael Arden

If you work, or have worked, for somebody else, you know a W-2 form is essential when filing your taxes. Without it, you’re stepping into the batter’s box without a bat.

This particular service form summarizes your annual income, benefits and taxes.

But if you have yet to receive your W-2 from a current or past employer, I want you to first contact them and ask why the delay. If you receive little response, or an unhelpful one, please consider these three important steps. You might need to implement one or all three of them in an effort to obtain the document and get on with your filing.

If none of these three options work, please reach out to me immediately. We can discuss the next best steps you can take moving forward.

Reach out to the IRS

The good part is that the IRS has made an effort to streamline their customer service questions through a toll-free number: (800) 829-1040. Calling this number is your first step toward receiving a substitute W-2 which you’ll need ASAP.

The bad part in dialing this number is the automated process it will walk you through (and the potentially long wait time). But if it’s a matter of receiving such an important document, enduring the process is a solid option. In addition, before you call, make sure you have these documents/details on hand:

– SSN

– Employer’s name, address and phone

– Dates you had or have been employed

– Estimate of wages you earned from the previous year

We can help you with this.

Fill One of These Out Instead

If you’re low on patience with the IRS, and your employer has yet to deliver your W-2, there are a couple more forms you could fill out.

Form 4852 is a “create your own” W-2 form, and you can use some of the information you prepared for the IRS, and therefore have on hand, to fill it out.

If the thought of creating a substitute W-2 makes you wary, you could request a filing extension using Form 4868, which will give you an extra six months to file your taxes. And if an extra six months is not enough to receive a W-2 from your boss, then you might have other issues to resolve in addition to filing taxes on time.

We can also help you with this.

Correct Any Mistakes

Sometimes, after completing the custom W-2 using Form 4852, taxpayers will send that form into the IRS, only to receive their actual W-2 days later. Use the real W-2 to double-check the information you wrote down on your 4852.

And if, for instance, you forgot to mark down a bonus you had received (in addition to your income from the year before), I don’t want you to panic.

Form 1040X isn’t as intimidating as it sounds. It will help you record the changes necessary to your W-2, which the IRS will fix after you mail it in.

Again, if you complete these steps or have further questions, please give me a call. Trying to file your taxes without a W-2 is not a happy feeling … but you’re not alone.

I commend any effort you take to resolve this issue on your own, but don’t hesitate to reach out for help. Talking with people like you is why I love my job.

Believe it or not, we have less than two months before federal taxes are due.

Yikes.

We have been meeting with so many Ventura County clients (including a fair number of new ones, thanks to YOUR referrals — keep them coming!), finding so many wonderful ways to help people save on their taxes, that it hardly seems possible that there could be, well, more.

But there is.

More, that is. Perhaps you, could give us a call ((805) 650-1052) or shoot me back an email through the email button at the top of the page if you need to get the process rolling, and we’ll help you get started right.

BTW, last week brought news that the federal government took in about 1% LESS taxes overall in 2018 than the previous year — but that within those figures, there was actually a slight UPTICK in personal income taxes brought in (which represents a new record for income tax revenue by the way). The lower number reflects slightly less overall tax revenue.

Make of that what you will.

But one thing is certain … as the federal government sees its revenue go down (even as its spending goes up, they will be looking for more ways, not less, to fix that problem. And one way you can avoid that happening to you is by having somebody in your corner helping you take every legal and ethical deduction possible. I wonder who that could be?

But moving on, and speaking of MORE … last week I brought you the first key to building real wealth: delayed gratification. Today, I write about a corollary to this…

Diana Castro’s Second Key To Wealth Building

“You must gain control over your money or the lack of it will forever control you.” – Dave Ramsey

Do you have a book or a movie you come back to on a regular basis? By “regular”, I mean maybe once or twice a year. The content is so good, you can’t let years go by without revisiting it.

I hope some of these topics that I share offer you something similar: timeless financial wisdom so that you and your family are put into a position to thrive.

But what is “thriving” … for you?

Only you can answer that. Do you like to travel? Drive fancy cars? Pursue education? Go see shows? Sporting events? Perhaps thriving for you is more laid-back. Creating space for yourself to rest, read and relax after the daily grind.

Here’s a piece of advice sure to help you thrive regardless of your income: live below your means.

Practiced to Save

In short, living ABOVE your means is spending more than you earn. It’s obviously not rational — but why do so many of us do it? Spending money on that vacation, car or special thing (what you THINK is thriving) is actually driving you into financial despair — no matter how good it feels in the moment.

All of those fun and worthwhile pursuits can truly be great things, and are made much more beneficial when you save up the money to actually pay for them. This kind of delayed gratification is not what a culture bent on the “quick fix” wants to hear, but you will be better for it in the long run.

One of the best ways to save money and live below your means is to store away top-line cash with each paycheck you receive. That way, a chunk of money is outside the realm of temptation to spend each week.

“One day at a time” is the name of the living-below-your-means game. And to win at that game, creating (and actually adhering to) an effective budget is the playbook you have to follow.

Practiced to Invest

Some people hear the term “diversify your assets” and immediately check out of the conversation. That’s a shame, because a definition of terms can go a long way here.

Assets are what happen when you make your money work FOR you — not the other way around. If opening a brokerage account, or navigating the stock market in general, has ever seemed foreign to you, that’s okay. But the sooner you learn about smart ways to invest, the greater return you will see in 5-10 years … a timeframe that will lapse quicker than you think.

Living below your means also pertains to purchasing a home. What would it look like to spend money on a “less-than-ideal” home, not worry about an excessive mortgage, and fix the home up to create greater value over time? It might be the perfect time to take a look at the Ventura County real estate market.

Living below your means is the first step toward using additional funds to invest. That’s where wealth building beings.

Practiced to Give

Now I have a little exercise for you (bear with me here): clench your fist and hold it out in front of you.

Is that how you hold on to your money? Again, a question only you can answer.

When you live below your means, you then make it possible to give money to charity or to those truly in need. This is where we examine a different kind of posture — unclenching our fists — so that we experience a different kind of wealth building.

A wealth that leads to legacy.

How do you want to be remembered in life? Not to get too morbid, but the money you have the day before you die will need to go somewhere the day after you die. Fact.

Part of your legacy is built on generational, financial impact. You can begin saving for impact today. All it takes is a little planning, patience and preparation.

Not only are we entering into the thick of tax season, but based on our political situation, we could be staring at another federal government shutdown on Friday.

Which means, well … we don’t know exactly what it will mean except that God bless you if you are trying to get help directly from the IRS these days. Not only are they still recovering from the PREVIOUS shutdown, but the day after Presidents’ Day happens to be their busiest day of the year, every year — and it just so happens to fall right at the beginning of the potential shutdown.

Yikes.

The good news is that working with aVentura County tax professional provides you options.

Not only do you not have to deal directly with the IRS (we do that for you), but if something did come up requiring their input, we have a “Practitioner Priority Line” that isn’t available to those poor blokes who try to go it alone with off-the-shelf software.

Furthermore, last week’s filing numbers data (compared to the previous year at this point) indicates that a lot of people are biding their time to get started on their taxes.

Let’s not have that be you. We’re here and we’re ready to get cranking on your behalf.

(And, of course, your friends’ behalf too: have I mentioned that referral clients are our favorite kind of clients? Please feel free to send your friends our way … despite how busy we are, we make a point to make room for friends referred by our clients.)

This week, I’m putting on my “financial coach” hat to encourage you to perhaps approach your finances in new light. Many of our Ventura County clients have many of these principles pretty well nailed, but this might push you further into a more profitable direction…

Diana Castro’s First Key To Building Wealth

“Patience is bitter, but its fruit is sweet.” -Aristotle

There is no shortage of financial advice out there – online of course, or from your second-cousin, Karl. But not all advice (especially from Cousin Karl) is valid for everyone.

The good news about having us in your corner, of course, is that I can answer questions about your specific situation that you’re going through. So if you have anything pressing, please do give me a call and I’d be glad to help. (805) 650-1052

But for all the advice out there, a few guiding principles undergird anything that is worthwhile — and today we discuss one of those: delayed gratification and how it will earn you greater wealth. Now I’m not guaranteeing you a lifetime of riches … I’m simply stating the fact if you can be patient, it will pay off in the end. Here’s how you should begin…

Kick Debt to the Curb

Although some debt can be useful when buying a house or in certain business situations, it often represents a reduction of cash flow. Consider ways you can eliminate any existing debt, and methods which would enable more cash spending. It takes a little extra effort, but ridding yourself of debt is typically the first step toward building wealth.

A new TV might be fun today, but what if you took that money you were going to spend and put it toward debt-freedom? Choosing this option ensures the TV will come someday … and we guarantee it will be bigger and better when you’re financially ready.

Thousands of Small Decisions. Not a Few Big Ones.

This is where financially-based delayed gratification is tough. And it feeds off the TV example.

What would it look like, instead of saving 6-10% of your annual income, to save 20%, 35% or even 50% of your income? Think of your wealth after saving for 10+ years?

You might be thinking, “How is that fun for anyone now?” But I’d argue that it can actually be a lot more fun. Why? It means creativity can take place. Instead of going out to eat at a fancy Ventura County restaurant, make dinner from home and go eat somewhere scenic in town for a picnic (where there’s nobody to tip). That’s one example among thousands, of how living below your means helps you save for the future.

The Power to Invest

If you are new to investing, or are thinking about investing in the near-future, I usually like to recommend an undervalued (and therefore likely to grow) blue chip stock (not likely to collapse), with a history of above-average dividend yields (steady cash flow).

Start there. Let’s not worry about boiling the ocean just yet.

And if you don’t know much about investing, that’s OK! This is part of the delayed gratification piece as well. It takes time to research and converse with trusted sources. I’d love to chat about this topic, and point you in the right direction toward strategic investing.

Play the Tape Forward

This bit of advice is not as “practical” per se, but it’s still incredibly valuable in terms of entering the right state of mind to build wealth.

With every purchase you make from here on out, I want you to play the tape forward in your mind, and think about how that purchase will affect your life. Every little purchase (a smoothie) all the way to the big ones (a week-long trip to Europe) will have an affect on your financial health. Am I saying to not have a good time?

Quite the opposite.

I want you to have the best time in life (eventually 🙂 ), while setting yourself up to help others and make a healthy financial impact on the world.

I went this long without mentioning the marshmallow test, but come on, people … we’re talking about two marshmallows or one. It’s as simple as that.

If you have any other methods you recommend to delay financial gratification, I would love to hear them from you, and to pass them on to others who are making strides in this area of life. It is worth it, one million times over. Feel free to email me anytime.

Politics aside, I think we can all breathe just a little easier knowing that the federal government is no longer in shutdown mode.

And on top of that, this morning, as I write, the IRS has begun accepting filed tax returns. Which means, well … it’s about to get real.

Now, leaving aside the fact that the IRS will probably be dealing with the ramifications of the Trump shutdown for quite some time, we are all going to be busy around here at Team Legacy Tax Services.

Which is why I wrote last week about the importance of filing early. Not procrastinating. Not putting this thing off…

Getting after it. Now.

I have a favor to ask of you for the week ahead, in my notebelow, but before I get to it, a word:

I want you to play the tape forward: it’s the day before tax day, April 14th, and other Ventura County taxpayers around you are scrambling. My phone will be going wild of course, and my email inbox will overheat … but I’ll take pleasure knowing you’re enjoying the space that our services provide for you — sipping on something delicious and enjoying the turn of Spring.

How good will it feel to know you took care of business a month or two before? (Keep me in your thoughts when that time comes.)

This is why we’re here! To help you process tax season. Shutdown or not.

Every year, tax season brings us dozens of gifts in the form of great individuals like you. We get to use skills that we’re passionate about to help you handle something you … might not be passionate about.

And that’s exactly as it should be. We understand you have unique gifts and passions yourself, and need to be active in your community and business, doing things that drive you. That’s why we love what we do: we get to free you up to be your best self.

Often, our Ventura County clients acknowledge the mutual benefit that comes from such a relationship, and year after year that verbal affirmation keeps us going, so we encourage you to keep it coming. If we’ve helped you in the past, thank you for your generous feedback! It really means the world to us.

In addition, we can’t express enough how grateful we are for your trust in us. We don’t take that lightly.

Now, to help earn the trust of others as we grow our client base, we have one request of you…

Well, perhaps two.

If you have filed your taxes with us before, would you:

A) Write about how our team has helped you in the past? You can find us on Google, and we’d love to have your feedback!

(And if for some reason you weren’t satisfied with our service, please write me back personally. I will do everything within my power to make it right, and will make it a priority, even this week.)

B) Would you forward this note to anyone you think would benefit from help with their taxes? Especially if it’s someone you think would prefer to file with a personable touch.

You can let him or her know we are willing to review their tax return to make sure that everything was done right for them. They can call us anytime at (805) 650-1052 and mention you referred them. We’re excited to hear from some of your friends and family!

So again…

Fast forward to a month or two from now, when you can relax, knowing that TODAY you took the steps toward financial responsibility for the good of you or your family, that you saved a bunch of money on your taxes, and (perhaps even better) that you didn’t have to deal with the dirty tax details. At the end of the day … that’s our job.